FCA: Barclays ignored own AML policies in Stunt & Co debacle

The Financial Conduct Authority (FCA) today said it had fined Barclays Bank for failing to adequately manage money laundering risks related to banking services it provided to Stunt & Co, owned by bankrupt British socialite and self-styled billionaire James Stunt.

Barclays failed to obtain sufficient information from Stunt & Co on the nature of its business from the outset when it began its relationship with it in 2015. This meant it could not appropriately assess money laundering risks it could present and breached its own policy of gaining “a sound understanding of the client’s business before entering into a relationship with them,” the FCA order said. 

The bank also failed to question Stunt on the source of his initial £1.5 million capitalisation of the account and overlooked the money laundering risk associated with the company’s written business intent to source gold from West African countries and sell it to customers in the Middle East, it said.

Stunt & Co, which Barclays had marked as low risk in 2015 and did not alter until 2020, had a close business relationship with purported jeweller Fowler Oldfield. But the bank did not question Stunt & Co for receiving 105 separate payments from Fowler Oldfield in less than three months totalling almost £9 million, despite this being in excess of its projected incomings stated to Barclays at the outset. 

The FCA said Barclays received more than £46 million from Stunt & Co in electronic transfers between July 2015 and August 2016; immediately after that period Fowler Oldfield was the subject of a criminal investigation involving suspicions of potential money laundering, which Barclays was aware of.

The case garnered widespread press attention not least for its details, including that Fowler Oldfield staff had been depositing black bin bags full of cash at a NatWest branch that did not fit in its floor-to-ceiling safes.

The regulator considered the funds proceeds of crime and that Stunt & Co’s account was used in part to launder the funds. James Stunt was acquitted in March of laundering £266 million of criminal property relating to the Fowler Oldfield payments. Fourteen cash couriers had been convicted of money laundering offences for their involvement.

Barclays failed to consider whether that risk rating remained appropriate despite the bank’s awareness of multiple risks regarding the business relationship with Stunt & Co, the FCA said in its order.

Despite widespread media reports in September 2016 showing that the premises of both Stunt & Co and Fowler Oldfield had been raided by the police in connection with money laundering, Barclays still did not alter the former’s risk rating. Barclays undertook a KYC refresh in respect of Stunt & Co January 2017, and despite the bank not having received responses to outstanding queries regarding Stunt & Co, certified that all necessary due diligence had been conducted.

The bank only began an investigation into Stunt & Co in 2021 after the FCA’s decision to charge NatWest with criminal offences and impose a £265 million fine over its relationship with Fowler Oldfield.

In the same action the regulator also fined Barclays Group £3.1m for failing to check it had enough information to understand money laundering risks before opening a client money account for the now-collapsed WealthTek.

The FCA said Barclays failed to carry out a “simple check” of the country’s publicly available financial register, which paved the way for WealthTek to take a total of £34 million from clients between January 2021 and April 2023 when it was not licensed to hold client money.

The lender asked WealthTek in July 2022 to complete an AML questionnaire within 30 days, warning that it would otherwise seek to close its account. WealthTek provided a partially completed version in March 2023 and Barclays subsequently closed the account the following month.

Barclays has agreed to make a voluntary payment of £6.3 million to WealthTek’s clients. Both fines were subject to a 30% reduction owing to Barclays’ cooperation.

The FCA has charged WealthTek’s former head partner John Dance with fraud and laundering more than £64 million from the firm’s client accounts. Dance is due to face a criminal trial in September 2027.

“The consequences of poor financial crime controls are very real – they allow criminals to launder the proceeds of their crimes, and they allow fraudsters to defraud consumers,” said FCA joint enforcement head Therese Chambers.

A Barclays spokesperson said the bank “remains deeply committed” to the fight against financial crime and fraud. “The FCA’s investigation relating to Stunt & Co was centred around historical money laundering activity and made no findings that the bank had breached money laundering regulations,” it said.

“As acknowledged by the FCA, Barclays undertook an extensive review and self-reported its findings to the FCA. Barclays fully co-operated with both investigations and has further strengthened its financial crime and other control capabilities.”